Know Exactly Where You Work

For most purposes, including taxation, UK waters are defined as our territorial waters out to 12 nautical miles from the nearest coast, and a few other designated areas. If you find work on a rig outside these waters, perhaps in another nation’s agreed oil exploration areas, you will be paying tax elsewhere, under different regulations.

As such, from the moment you receive a job offer it can be important to know which waters you’ll be working in.

Double Check Double Taxation

A number of offshore oil workers we’ve spoken to have been surprised at least once in their career to discover that they’re working in a country that doesn’t have a Double Taxation Agreement (DTA) with the UK.

Despite the name, DTAs are actually a good thing; they’re designed to prevent situations where a worker is ‘double taxed’, having tax obligations to two different nations at once, while still ensuring that both governments are happy with the tax situation. As you can imagine, this is a fine line to walk!

The UK has more than 100 different DTAs with other nations. These include the Netherlands, Germany, Denmark, and Norway – all major nations in the North Sea oil and gas industry.

Understand Your Tax Implications

As well as working in UK waters or in a nation with a DTA, the factors that can affect your tax obligations (and your available tax opportunities) as well as National Insurance contributions include:

• Do you work for a UK company?
• Are you a UK national or a foreign national?
• Are you paid through your own limited company and, if so, where is it registered?

Overseas contracts are likely to trigger foreign tax reporting requirements. Operating through a UK limited company will raise considerations of corporation tax and dividends.

Consider IR35 Compliance

As always, whether or not you’re in compliance with IR35 is a huge factor in the end value of what you’re paid. For offshore workers, you’ll be working in a specific location, which is part of the test of control that’s part of the IR35 status tests. This makes it even more important that you look at the rest of these tests to ensure you have a correct determination.

As always, there are many other factors that can significantly affect the profitability of a given contract for offshore oil workers, but the above summary covers the most common questions. If you believe you may be affected by another factor and want an expert opinion, or if you simply want to understand exactly what the tax implications of a given role are in the 2026/27 tax year, please get in touch to arrange a discussion.

The post Accounting Tips for Offshore Oil Workers first appeared on ICS Accounting.

It’s possible that as you read this you’ll think of some oddity not covered here. As always if you believe yours may be an edge case, we recommend you contact us to have a discussion about your specific circumstances.

What’s the Minimum Number of Employees for a Pension?

While this question comes up a lot, the answer is: one. Your first eligible employee must be enrolled into a pension scheme, and the scheme should ideally have been set up before they start working for you.

However, if that first employee earns £6239 or less per annum, whether or not you pay employer contributions into the pension is optional.

What Makes an Employee Eligible?

Employees are eligible and must be enrolled into your pension scheme if any of the following are true:

• They are between 22 and 66 (current state pension age)
• They earn more than £10,000 per annum
• Neither of the above are true but they have requested to be put into a pension scheme

What Obligations Do You Have to Employees Outside the Scheme?

It’s your responsibility to monitor whether that eligibility changes. This is as simple as tracking age and annual earnings.

Non-eligible employees who are about to become eligible must be informed in writing of when they will become eligible and what will happen when they do.

Lastly, you’ll need to carry out a declaration of compliance to be submitted to the Pensions Regulator. For more on this, see the Regulator’s own guide here.

What Do I Tell Eligible Employees?

Eligible employees must be told in writing what being on your pension scheme means for them. For the most part, your pension provider will handle this for you.

How Much Are Employers’ Contributions to a Pension Scheme?

The legal minimum employers’ contribution to the pension scheme is currently 3% of an employee’s qualifying earnings between £6240 and £50,270 per annum. These figures are reviewed annually, so be prepared for them to change periodically.

Qualifying earnings include salary, commission earned, and bonuses and overtime paid, as well as statutory pay for maternity, paternity, adoption, or sick leave.

Many businesses in the UK offer pension matching, where they pay 5% of salary (the figure the employee pays) as a tool to help retain employees, although this is relatively uncommon in small businesses.

When Are Payments Due?

Pension contributions must be paid by the 22^nd after the month following the paycheque. The amount due should be calculated when payroll is run, so you’ll always know what to pay well before it’s due.

What Do I Need to Know About Pension Tax Relief?

Tax relief is earned on the tax that would have been owed for their pensions. This relief is based on the highest rate of income tax paid, but the pension annual allowance provides a cap on this relieve. This cap is £60,000, or if your salaried income is less than that, the cap is set at 100% of your income.

To answer any other questions or to enrol in our outsourced payroll service, get in touch.

The post Small Business Pension FAQs first appeared on ICS Accounting.

Well, didn’t June bring the heat! We hope you stayed comfortable and weren’t too impacted by challenges as the good old British infrastructure struggled to cope. In and out of the office, ICS kept our cool, whether on the road visiting clients, partners and employees, cheering on our national sports teams (not just football, and not just the men’s!), as well as finding inspiration to add even more core benefits to ICS Umbrella – scroll on to read all about it!   

Convening and Collaborating 

Colin set the alarm early to attend CMR Recruitment’s very timely Manchester breakfast seminar focusing on the landscape post Joint and Several Liability (JSL). Great opportunity to catch up and network, as well as thought-provoking presentations from a panel including Josh Bramhall, Daniel Moss, Sebastian Sauca and Hannah Morrison. Uplifting to know that responsible agencies’ early compliance groundwork is paying dividends for employees in terms of trust, care and transparency. 

Helen enjoyed representing ICS at the Lancaster & Morecambe Chamber of Commerce’s June networking event. With lots going on in the area, including the landmark first “spade in the ground” of the Eden Project Morecambe, it was a vibrant, positive sharing of information, plans and ideas.

Travel Diary 

Record-breaking temperatures or not, our sales and partnership support teams were travelling the land, combatting train strikes, melting railway lines and intermittent air conditioning! Sales Manager Alison led the charge, travelling to Manchester and London, where she was joined by Account Manager Kieran. 

Fantastic to see the enthusiasm for our new Umbrella Plus package, especially the inclusion of Bupa healthcare for all umbrella contractors (see more below). Whether it’s our Northern heritage, but we love direct and face to face contact with our clients, partners, contractors and employees, so get in touch to find out when ICS are in your area, or schedule a visit. 

People News 

Hugely pleased to announce Jodie Mace’s promotion to Associate Director of Compliance & Operations. No-compromise adherence to compliance and consistency is our watchword at ICS Accounting, and throughout almost 15 years’ dedicated service, from Customer Service to the last 7 years as Head of Compliance, Jodie has been instrumental in developing the watertight policies and procedures that protect our business, agencies, clients and contractors. MD Colin says: “Jodie has become one of the rocks our business is built upon and I’m excited to see how she will continue to positively influence in this wider role.” Congratulations, Jodie! 

Well done also to Luke, passing the next level of his ACCA (Association of Chartered Certified Accountants) Financial Management exams. Congratulations to Deborah Gardner at our partners Hanley & Co. Accountants, who has welcomed a new grandson. And clearly not put off by the heat, some of the team have been beating the Lancaster University Trim Trail in preparation for taking part in Born Survivor in September, we’ll share their progress (from the sidelines!) 

Windows onto Gratitude 

When the world can seem confusing, and life hectic, it’s always worthwhile to slow down and really notice the small details, like family moments, pets or walks. This is the tenet of our Gratitude Gallery initiative, facilitated by professional photographer and former NHS mental health services occupational therapist Ginny Koppenhol. Capturing informal smartphone snaps of appreciation from everyday life for our office gallery also helps us connect as individuals rather than job titles. 

Beautifully illustrated by this moment of observation from Jodie: 

“I spotted a painted stone in my garden that my son and I made during the COVID-19 lockdowns. Despite the uncertainty we all faced, I’ll always treasure the extra time and simple moments I had with my little boy. With recent industry and legislative changes, life can feel hectic, so seeing that little painted stone was a good reminder of the importance of staying centred. Sometimes the smallest things bring the biggest perspective.” 

Summer of Sport 

You can’t have escaped that there’s been a certain football competition going on. While we dream of scoring the winning goal, our Men’s World Cup sweepstake, with prizes including lunch for the whole team, is hotting up ahead of the final. 

Before then, we have the final of an equally exciting competition for skills, thrills and upsets, the ICC Women’s T20 World Cup. One of the most open contests in years, with the school holidays approaching, it’s enthusing many of us to get out on the pitch, park or playground with our own little sports stars. 

Umbrella+ 

We’re always striving to offer ICS Umbrella Employees more than “just” trusted, compliant and seamless administration and delivery of your salary, tax, deductions, pension and benefits. So we’re thrilled to have launched Umbrella+, a significant upgrade that includes: 

• BUPA Cash Plan, for everyday healthcare costs like dental check-ups, eye tests, and physiotherapy 

• Greater pension flexibility with no increased margin or admin fees for SIPP contributions 

• £100 emergency pay advance facility for unexpected situations 

In addition to:  

• Discounted retail cards from over 120 brands 

• Up to 60% off cinemas nationwide 

• Over 500 vouchers and promotions from the best brands updated weekly 

• Discounts at leading events and attractions 

• Huge discounts at hotels worldwide 

And of course: 

• Full employment rights 

• Dedicated UK-based support 

• SafeRec verified payslips 

• FCSA accredited services 

• Your information and records available 24/7 

• Easy access to your personal ICS advisor 

So, if you want to check you’re getting the full benefit of ICS support, or are interested in discovering more about any of the outstanding bespoke contractor, accountancy and umbrella solutions we offer across a wide range of sectors and specialisms, just get in touch. 

Wishing you a Goldilocks July (not too hot, not too cold, please!),  

Your ICS Accounting Team 

The post Keeping Our Cool and Feeling the (Additional) Benefits in a Record-Breaking June first appeared on ICS Accounting.

We call this the bloke-down-the-pub effect, but for business owners dealing with corporation tax it’s more likely to be a mentor or a former colleague who was talking in very general terms.

It’s always vital to ensure that you are paying all the tax you are liable for, and it’s important to know what tax you shouldn’t be paying.

So here’s a guide to corporation tax for SME owners, covering some of the most common points of confusion. This guide is written in 2026; if you’re reading it in the 2027/28 financial year or later, we recommend you double-check with us in case things have changed.

Do You Need to Register for Corporation Tax?

When a limited company is formed, it is automatically registered for corporation tax. (Sole traders and partnerships are not liable for corporation tax).

Limited companies set up in recent years almost certainly have all relevant services connected to their business tax account. However, if you’re not sure this has been done, talk to your accountants or follow this government guidance.

What is Corporation Tax Payable On?

Taxable profits for the purpose of corporation tax includes:

• Trading profits from doing business
• Chargeable gains from selling business assets at profit
• Returns on any investments

The amount of tax owed is calculated after the payment of salaries and other deductible business expenses, but before the withdrawal of dividends.

Capital allowances can be claimed on the purchase of machinery, other equipment, or business vehicles bought for your business. You can also claim for the ongoing costs of running your business.

However, you cannot claim for anything for which you or your employees use personally; these must be treated as a benefit.

Other tax reliefs include marginal relief (of which more below), profits received for patented inventions, spending on R&D, reliefs for creative industries, and several others. Depending on your business you may or may not qualify for some of these more obscure reliefs, but the full list is beyond the scope of this blog; if you think you may be covered we recommend discussing specifics with your tax accountant.

When Does Marginal Relief Apply?

The main rate of corporation tax is 25%, but this is only when your taxable profit is £250,000 or higher.

The small profit rate for corporation tax is 19%, but this is only when your taxable profit is £49,999 or lower.

In between £50,000 and £250,000, marginal relief applies.

Please note here: If your limited company is one of a group of associated companies, the calculation for marginal relief is different than it would be for a single limited company. This is a result of legislation against a single business being broken into smaller sections that might all qualify for small profit rates or marginal relief.

The simplest way to look at marginal relief is that that 6% increase in tax is applied on a sliding scale between the two. However, calculating the level of marginal relief itself is a complex process; rather than something that’s easily calculated by rule of thumb, there is an official government marginal relief calculator.

What is Credit Interest?

If your corporation tax is paid early, HMRC will pay interest on the payment. This is called credit interest, and it is always set to be 1% lower than the current Bank of England base rate.

Credit interest is paid between the date you pay and the payment deadline, with the earliest date to be paid being 6 months and 13 days after the beginning of your accounting period.

Interest is allocated on the day of the payment deadline. It is treated as taxable income.

If you overpay your corporation tax early, interest is only paid on the due sum, and small sums would usually be carried forward to be offset against future tax liabilities rather than being repaid.

Of course, any payments made in this manner take money from your account, where you might otherwise use it in the business.

As you can imagine, while there are circumstances where there’s particular value to paying corporation tax early, whether or not it’s a better option than something else is very dependent on your circumstances. We would always advise decisions of this sort be taken only after expert advice.

One thing, however, we do recommend against. Payments should not be made late!

The post Corporation Tax and SMEs first appeared on ICS Accounting.

There are several knock-on financial effects for landlords.

• New regulations provide greater incentives for homebuyers, reducing the renting population
• Finance to expand can be harder to arrange
• Even welcome changes like the increased AML introduce additional costs in time and money
• Taxation changes can further reduce profits

The combined impact of these factors can be reduced by working with specialist property accountants like the ICS Accounting landlords team.

Identifying Tax Opportunities

The tax situation for landlords is notoriously confusing, so much so that HMRC published a document setting out example errors commonly made by landlords. This was last updated in 2017, so don’t treat those issues as current – but it’s not something they do for every industry, so that definitely tells you something!

We highly recommend that you double-check you fully understand your tax obligations not just when filling out your tax returns but throughout the year. With a clear understanding and careful planning, you can make the most of the tax opportunities you’re eligible for, and you may make decisions that reduce your overall tax liability, all while remaining fully compliant.

In particular, if you’re looking to sell some of your property portfolio this year, it’s well worth being aware of the potential Capital Gains Tax (CGT) implications of your sale, as well as any other charges that might apply. When divesting yourself of properties, a strategy can really help you to minimise effects.

Buy to Let Limited Companies

The 2020s has seen an explosion in the number of landlords incorporating as limited companies. This has one huge advantage in that it introduces a barrier against full financial liability. It can also mean lower tax liabilities at the end of the financial year, but this is by no means guaranteed.

As a limited company:

• You may be paying less corporation tax on profits than you would in personal income tax, especially at higher rates
• Restrictions on mortgage interest relief and relief on finance costs are more relaxed

But:

• There will be an additional layer of tax on what you pay yourself
• As property is considered an investment rather than a trade, you will be ineligible for some tax reliefs
• A number of buy-to-let mortgages are not available to limited companies, so you may find yourself having to take more expensive mortgages
• When you first incorporate, your property must be sold to the limited company, incurring capital gains tax, potential early repayment charges on an existing mortgage, and the costs of a new mortgage under the company

We’ve heard a number of people within the industry use a rule of thumb that it’s time to incorporate at about your tenth or eleventh property, but ultimately when and if you make the switch will depend on so many individual factors that this can only be a rule of thumb.

Whether you want to think about incorporation, aren’t sure if you could be more tax efficient, or just want to make sure you understand the finances of the business, get in touch – we’ll be happy to have a conversation.

The post Accounting Tips for Landlords first appeared on ICS Accounting.

Quite honestly, a balance sheet is a powerful tool for making business decisions. While they can take some time to learn to read, the way they present information is extremely useful.

Why Do You Need a Balance Sheet?

As a limited company, of course, you need a balance sheet as part of your tax records. But balance sheets are also a key part of your management accounts. Management accounts weren’t designed for tax records; over decades, the techniques for management accounts have developed to help to plan for the future.

Your balance sheet is a snapshot; it gives you a clear, detailed picture of your assets, liabilities, and your net book value at the moment the balance sheet is created.

Only the smallest sole traders can really keep all of this information in their heads, but experience has taught us that as a business grows, some owners continue to believe their mental picture is accurate enough to be useful over time. (Even then, we recommend you keep your Profit and Loss (P&L) sheet up to date.)

With these accounts, you can more easily and effectively identify where individual projects, products, or customers are becoming a problem. Starting while still a small business gives you practice reading these reports for the point where the business has grown enough that there’s no other way to track your performance.

Many lenders also require a balance sheet as part of a loan submission. Your balance sheet will show what existing obligations you have, and it also confirms the extent of your assets. This information allows lenders to feel confident when offering loans.

Using Your Balance Sheet

A balance sheet is split into two sides (the name comes from the process of balancing the two).

You record your assets on one side. This includes the value of all property and equipment owned by the business and the total liquid assets. Calculating equipment value can often be the most complicated part of the process.

On the other side, current liabilities should be added – this is anything payable within a year – wages, loans, pending supplier payments, and taxes – alongside your equity (retained earnings and common stock).

You should find that the two values are identical. If they aren’t, check all starting figures and calculations carefully to identify any error in your working. If there’s no error in your working, you have a serious problem on your hands. Most likely, the issue will be with your cash flow.

If you find you have a serious issue, we encourage you to get in touch – we may be able to help you identify the problem and start figuring out a solution.

The post Using Your Balance Sheet first appeared on ICS Accounting.

Tax regulations in the UK are not designed to be so complicated that only professionals can handle them, but as they evolve constantly, it’s still important to keep up to date with the latest changes so you can understand the implications of any that affect you.

At the heart of a correctly filed tax report are accurate records and double-checked calculations. The third ingredient, however, is time – the time needed to keep your records up to date, to identify any unexpected tax liabilities and to make sure you’re aware of all tax opportunities. The less experience you have, the more time you’ll need to take.

That’s why many sole traders still want their accountants to do their self-assessment.

Should You Ask an Accountant for Your Self-Assessment?

If you don’t have time to do your self-assessment with the diligence it deserves, or if you’re not confident in your understanding of all relevant tax regulations, you might want to have an accountant handle your self-assessment tax returns. In fact, this is one of the government’s own suggestions!

Sources of Tax

The fact of the matter is that the majority of incorrect self-assessments are the result of tax sources that the filer may not have been aware needed to be part of the assessment.

It’s not just about the income received directly from your business. If you also have income from renting property or you’ve sold items qualifying for capital gains tax during the year, these also need to be represented. Even interest on your savings should be taken into account!

A sometimes-controversial factor is the High Income Child Benefit Charge. If you or your partner receive child benefit and your individual income is above £60,000, you qualify for this charge. This can also be true if someone else receives child benefit for a child who lives with you, provided they contribute at least an equal amount toward their upkeep.

This charge is levied to reduce the government’s additional spending for the keep and care of children in cases where at least one of their parents or guardians is capable of shouldering the full amount. The controversy comes from the way it is levied, meaning that if you were near the threshold and your income increases above it (but not by much), you may feel unduly affected.

Claimable Expense Types

As a self-employed individual, a number of different categories can be expensed.

This blog is not the place to go into each one in detail, but if you weren’t aware of any of the following being eligible for expenses, you may be missing out on these and others:

• Staff costs (if any)
• Office costs including phone bills, stationery, etc.
• Financial costs (insurance, bank charges, etc.)
• Costs associated with stock or raw materials
• Business travel costs
• Marketing expenses, including digital marketing
• Any training courses taken for the purpose of growing your business

As you can see, going into the specifics of what can be expensed under which circumstances would take much longer than this article – instead, we recommend you consult an accountant!

The post Should I Use an Accountant for My Self-Assessment? first appeared on ICS Accounting.

Bookended by two Bank Holidays, May has meant holidays, hitting the road and having great times at ICS. With the sunshine finally getting the memo, we’ve been enjoying getting out for fresh-air activities, summer crafts, and some very local nature-watching! With networking events, partner agency meetups, and some vital warnings about spotting unscrupulous attempts to circumvent regulation and compliance (which could put YOU at risk), grab a spritzer and read on!

Office Insight

Moving into rolling holiday season (we’ll name-and-envy later), we kept up the dedication and focus on the home front, continuing to hit record sales and contractor payments. It’s important to have days where the whole sales team rest their train apps and hit Head Office to update, collaborate, support celebrate and motivate each other (with some friendly challenges!). In line with the launch of JSL legislation, we launched our new Compliance Portal, further enhancing our Agency partner services, providing the full transparency and peace of mind that’s the ICS USP.

Welcomes & Well Dones

Welcome Luke Gregson, qualified accountant starting his ICS Accountancy journey. Due to our expanding reputation and client portfolio, we’re continuing to recruit, revelling in offering not just jobs but training, professional qualifications and rewarding career opportunities in our hometown. Well done to Kim and Nathan for passing their AAT (Association of Accounting Technicians) exams.

Welcome back from maternity leave to ICS Finance Director Maggie. And a huge well done to Maggie’s eldest, helping his football team bring home the League Cup, and being named Player of the Match. Nothing beats supporting local clubs, grassroots sport, and community initiatives.

Getting Crafty, Horsing Around

We’re all about the details, which we put to the test with a glass painting workshop, organised by our social team. Great for mindfulness- and now we’ve got pretty glassware for cheeky après-office Prosecco! Providing support in more ways than one, DIY supremo Colin put together a riser desk that, at the time of writing, is still standing…

A fabulous day at the Races with our friends from AMB Recruitment Group, award-winning construction, engineering and technical recruitment specialists, thanks to Megan for whipping the ICS contingent over the line- we even celebrated a few winners!

Out & About

Jodie and Helen attended the FCSA forum (Freelancer & Contractor Services Association) in Manchester. The UK’s leading professional membership body dedicated to raising standards and ensuring compliance within the contractor market, it was a day of great networking and thought-provoking compliance presentations; lots of valuable takeaways.

As usual, our sterling sales and partnership teams were out and about, including Alison and Kieran heading to London, and Megan taking Michaela to meet some of her fantastic agencies and clients. Nothing strengthens that genuine personal relationship like putting faces to names and catching up in person, so if you’re in the market for a meetup, drop your ICS partner a message, and we’ll drop in!

Holidays & Hitting the Pavements

Staff heading off on well-deserved sunny breaks included Alison, Kieran and Colin, returning refreshed and raring to go. We understand there was much selfless auditing of various bars and all-inclusive buffets!

Putting us all to shame, ICS Management Accountant Luke ran the Blackpool Festival Marathon, finishing an incredible 73rd out of 673 runners with a time of 3:13:17- a huge well done!

Award Nominations are In

It’s that (dreaded) time again- awards nomination, where we have to distil and shout up what we do. Always a bit squirm-inducing, but if you do something great, there’s no shame in receiving recognition- and spreading the word. It’s actually a valuable exercise in taking pride in what we have achieved, passing on well-deserved thanks- and identifying how we can stretch ourselves further. The forms are in, so it’s fingers crossed. Awards are great, but just the icing on the cake of what we love driving for, every day.

View From the Window

‘Springwatch’ is back on the TV, but we’ve got our own Nature Corner at ICS, with compliance admin Jamie enjoying front-row seat to a burgeoning wood-pigeon nest.

Beware of Imitations!

Unsurprisingly but sadly, just weeks after the enforced JSL legislation, we’re already hearing reports of unscrupulous businesses pushing products which supposedly circumvent it. When HMRC inevitably catch up with them they’ll disappear, leaving contractors in the lurch and agencies with the liability. Even more reason to choose an accredited accountants for peace of mind, trust, care and compliance. We’re always happy to advise, just get in touch.

Even more worryingly, Chris Bryce, Chief Executive of the FCSA, warns that some increasingly desperate dodgy umbrella companies are claiming to be FCSA Accredited, when nothing of the sort. FCSA Accreditation is awarded only to providers who have passed a regular independent, rigorous audit covering tax compliance, employment law, financial integrity, and supply chain transparency. Luckily, it’s also transparently verifiable: at http://www.fcsa.org.uk/directory-of-members/ (you’ll find ICS there!). If you discover or suspect someone to be claiming false FCSA accreditation, please flag it to them for investigation.

For more up-to-the-minute industry information, regulatory advice and invaluable insights, keep an eye on our regular blog posts.

Wishing you a fabulous midsummer,

Your ICS Accounting Team

The post Going Racing, Marathon Time, How to Spot Fraudsters, and ‘SpringWatch’ Outside the Window- a busy May at ICS first appeared on ICS Accounting.

There are times, though, when a business can be performing profitably according to the books, but your bank balance is still low at any given time and you can struggle to make payment deadlines.

So how do you change that?

Improve Your Payment Cycle

Outside of shops, almost every business finds themselves doing some work on credit. Whether it’s 30-day terms (or even 90-day) as standard or your contract technically requires payment in advance, but a regular payment slips when the work still needs to be done, often a certain amount of your profitability is still waiting to be received.

By instituting tighter payment controls and by pushing your dunning cycle more efficiently, you can ensure your cashflow gets better and more in line with your profitability.

At ICS Accounting, we’ve heard many small business owners talk about the point where they realised some late-paying customers needed cutting out, even though they represented a significant amount of the company’s work. The hidden cost of delayed payment can sometimes more than wipe out your profit margins.

Of course, many customers who pay a little late sometimes are still valuable steps in building your own business. Cutting one off is something you need to be careful about doing – but it underlines the importance of knowing the true value of every customer.

Frequent Financial Review

How do you know the true value of your big customers? Make sure you review the books regularly, and at any time a lack of cashflow affects your business (when your payments are delayed, or when you miss out on opportunities because instead you have you make a payment), make sure you know whose payments were outstanding at that time.

This can be even more effective than just tracking which businesses pay late and how late they pay, but we recommend doing both. Confirming patterns in late payment and having the data to back them up gives you better decision making power than just having a vague feeling that Customer X pays late every so often.

While this does mean more time studying your financial information than you might spend otherwise, that has its own benefits. The longer it’s been since you looked at your management accounts, the less clear your picture of your situation is.

Build in a Buffer

The best way to keep your cashflow strong is to remember that as well as predictable payments (tax bills, VAT payments, etc.), there are one-off or unexpected payments that need to be made. By ring-fencing some of your paid profit as an emergency buffer you have more flexibility in these situations.

Know Your Tax Liabilities

This is one of those categories that should go without saying but doesn’t. We’ve quite often spoken to small business owners who weren’t clear on what tax legislation changes might do to their bill, or who didn’t fully understand what tax and National Insurance payments add to a new employee’s paycheque in costs, or who had a rough idea in mind of what tax they’d owe based on the previous year but had a much more successful year.

You really do need to be ready for your HMRC payment; while they will usually work with you on payment plans if you need to, these come with a significant additional cost (not to mention messing up your cashflow for the following year). If you can’t keep up to date with tax calculations, relevant regulatory changes, and the rest, why not get in touch? We’re always happy to help.

The post Managing Cash Flow as a Small Business first appeared on ICS Accounting.

As always with these blogs, we would recommend consulting directly with an accountant as specific situations do vary.

What is the Basic Rate for Dividend Taxes?

Beginning this past April 6^th, the Basic Rate has risen from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The Additional rate remains fixed at 39.75%, and the dividend allowance remains at £500.

The tax on dividends remains lower than the equivalent tax on salary, but this cost has changed; the most tax efficient way to receive your payment will have changed in addition.

Obviously the best course of action will vary wildly between any two contractors or businesses depending upon your requirements. Other factors work taking into consideration include:

The ISA Allowance

Dividends received on investments held in an ISA are tax free; the maximum amount you can invest in ISAs each tax year is currently set to £20,000, and this allowance cannot be carried forward to future tax years.

Investments held inside an ISA are also exempt from income tax and capital gains tax. This is very tax efficient, but of course does require you to be able to set that money aside – so how far you can pursue this will vary not just according to your business results but also your own personal needs.

Pension Contributions

As with the ISA, paying dividends into a pension fund allows you to save for the longer term provided that you still leave yourself enough liquidity to handle the year’s expenses – and you should include some allowance for safety when you do!

Pension contributions qualify for tax relief at the marginal rate, which can significantly increase the savings made on any proportion of your income you’re willing to set aside for the long-term future.

Taxation Evolves

The best strategy for tax efficiencies will always shift slightly from year to year, and sometimes the ramifications of a change will not be immediately obvious. To make sure you maximise your available opportunities while still remaining fully compliant, we recommend regular discussions with your accountant.

Contact us today to find out how we can help.

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